Correlation Between Xtant Medical and Tandem Diabetes

Can any of the company-specific risk be diversified away by investing in both Xtant Medical and Tandem Diabetes at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Xtant Medical and Tandem Diabetes into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Xtant Medical Holdings and Tandem Diabetes Care, you can compare the effects of market volatilities on Xtant Medical and Tandem Diabetes and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Xtant Medical with a short position of Tandem Diabetes. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtant Medical and Tandem Diabetes.

Diversification Opportunities for Xtant Medical and Tandem Diabetes

0.26

Correlation Coefficient

Xtant Medical  Tandem Diabetes

Modest diversification

The 3 months correlation between Xtant and Tandem is 0.26. Overlapping area represents the amount of risk that can be diversified away by holding Xtant Medical Holdings and Tandem Diabetes Care in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tandem Diabetes Care and Xtant Medical is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Xtant Medical Holdings are associated (or correlated) with Tandem Diabetes. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tandem Diabetes Care has no effect on the direction of Xtant Medical i.e., Xtant Medical and Tandem Diabetes go up and down completely randomly.

Pair Corralation between Xtant Medical and Tandem Diabetes

Given the investment horizon of 90 days Xtant Medical Holdings is expected to generate 2.09 times more return on investment than Tandem Diabetes. However, Xtant Medical is 2.09 times more volatile than Tandem Diabetes Care. It trades about 0.32 of its potential returns per unit of risk. Tandem Diabetes Care is currently generating about -0.08 per unit of risk. If you would invest  40.00  in Xtant Medical Holdings on October 22, 2024 and sell it today you would earn a total of  12.00  from holding Xtant Medical Holdings or generate 30.0% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Xtant Medical Holdings  vs.  Tandem Diabetes Care

Xtant Medical Holdings

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Xtant Medical Holdings has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, Xtant Medical is not utilizing all of its potentials. The latest stock price uproar, may contribute to short-horizon losses for the private investors.

Tandem Diabetes Care

Risk-Adjusted Performance

3 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Tandem Diabetes Care are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of very unfluctuating fundamental indicators, Tandem Diabetes may actually be approaching a critical reversion point that can send shares even higher in February 2025.

Pair Trading with Xtant Medical and Tandem Diabetes

The main advantage of trading using opposite Xtant Medical and Tandem Diabetes positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtant Medical position performs unexpectedly, Tandem Diabetes can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tandem Diabetes will offset losses from the drop in Tandem Diabetes' long position.

The idea behind Xtant Medical Holdings and Tandem Diabetes Care pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Holdings module to check your current holdings and cash postion to detemine if your portfolio needs rebalancing.